Goldman settles and joins BP in the comeback race

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Goldman Sachs proposed a $550 million settlement with the SEC. The firm was trialed on fraud allegations after regulators found documents and emails which contained information that was never shared with investors. The settlement must be approved by US District Judge Barbara Jones in New York. So, it's not over yet - Goldman is still under criminal investigation.

Meanwhile, Goldman's stock (GS) experienced a rally in which a reversal is evident. After experiencing a major decline following the SEC announced its trial, Goldman is now experiencing a comeback. Investors are relieved that the company is able to move forward. Expect a bumpy reversal though, considering that the trial is not officially over. The chart featured in today's WSJ provides a great visual breakdown of GS stock performance during this debacle.

BP is also another underdog experiencing a comeback. The media has covered the massive Gulf Coast oil spill in great depths, and the company is faced with billions of dollars in cleanup charges and lawsuits. This caused a sharp decline in BP's stock, but as the issue subsides, investors are starting to realize BP's value. Engineers are getting closer to actually plugging the hole, the tests show that something is being done. Also, oil exploration and the energy sector as a whole is strong. Most important is the major investment interest in BP after the company's value tanked. Middle Eastern investors have their eye on obtaining a valued stake in BP; CEO Hayward even visited some partners in the region earlier this month. Investors are optimistic about BP's longevity, and cash from major holders is certainly needed.

In sum, these two important comebacks is something to learn from. Companies or any other investment in distress serves as a good bargain for value investors. It pays to follow the fundamentals, and enter at the reversal. Things are bound to turnaround, you just have to know when. Especially in the macro perspective, the global economic slowdown is the perfect time to start looking at the long run; even though a recovery will take much longer than micro investments like BP and Goldman. Either way, it's a good time for analysts and economists - heed well to their due diligence.